This is how California utilities created and spread a lie in an effort to crush rooftop solar and hold on to their monopoly.
The short story: A utility lie helps politicians avoid blame for high electricity rates while killing the utilities' competition.
- Governor Newsom’s administration has pushed to make rooftop solar less affordable for everyday Californians.
- They justified these actions with a lie that blames rooftop solar for high electricity rates. In fact, the data clearly shows that rooftop solar saves all ratepayers money by reducing the cost of the electricity grid.
- The lie, which they called the “cost shift,” was created by utility strategists nearly ten years ago. The lie was then brought to California and supercharged with lobbying, cronyism, and political contributions to make it look legitimate.
- Governor Newsom and his regulators, eager to deflect the blame for high electricity rates, picked up the lie and ran with it.
The longer story: The lie about rooftop solar began as a utility strategy to protect profits from competition
Utility industry strategy memos from 2012 and 2013 outline how rooftop solar presents a competitive threat to the utilities’ profits.
Both memos use the now-common phrase “shifting costs” and make the false claim that rooftop solar customers don’t pay their fair share of the grid, increasing the burden on other ratepayers.
These memos never suggest that the utilities should adapt to changing customer behavior and choices. For example, the utilities could pursue a different business model that relies less on maximizing spending on poles and wires. Utilities could have gotten into the rooftop solar business themselves.
Instead, the utilities focused on preserving a monopoly that profits from building more poles and wires, whether justified or not.
Step one to making the lie stick: get the most pro-solar state to legitimize the concept of the lie
Around the same time the utilities wrote down their internal strategy, they worked to give the lie some official legitimacy. To do that, they turned to a former utility executive who had recently become a lawmaker in the most pro-solar state in America—California.
Then-Assemblymember Steven Bradford, who previously served as a SoCal Edison public relations executive for twelve years, introduced and passed AB 2514 in 2012, which made the concept and terminology of the “cost shift” official.
Hardwired into the bill is the false premise that when customers reduce their energy use, it increases rates on other people. Here’s a short video explaining why this is both untrue and absurd.
Facts aside, AB 2514 represented a major departure from state policy, which up to that point had correctly considered “self-consumption” as a benefit to the state in the same vein as turning off the lights (for example, see p. 4 of this 2010 CPUC report).
Step two to making the lie stick: get trusted voices to build sympathy for the utilities
Another brick in the foundation of the lie was making opinion leaders feel like the utilities were sympathetic victims, and conversely, to build negative feelings towards the consumers who were choosing rooftop solar.
That’s where the Natural Resources Defense Council (NRDC) came into the picture.
NRDC has a cozy relationship with the utility industry that goes back decades, so it was no surprise when NRDC declared in 2014 that the utilities were in a “death spiral” due to more customers making their own solar energy.
Like many of NRDC’s other claims, this one proved to be untrue; utility profits have grown steadily even as rooftop solar has gotten more popular. But when elite messengers spread a lie, other elites tend to believe it.
With their “cost shift” concept formalized by California law and supported by the country’s biggest environmental group, it was time for the utilities to sharpen their messaging and go on the attack.
Step three to making the lie stick: use public relations psychology to twist the facts
A 2017 strategy presentation by the Edison Electric Institute, the utilities’ national trade group, laid out the specific language tricks the utilities would use to promote their lie. The presentation was obtained and published by the Energy and Policy Institute, a utility watchdog project.
The utilities’ strategy document is not based on evidence or data. It is based on psychology and language tricks.
This utility strategy memo contains the four utility lies about rooftop solar.
Below are some slides from the utilities 2017 PR presentation. The presentation contains all four elements of the utilities’ “cost shift” lie:
Step four to making the lie stick: make it look like the lie is supported by math
Once they cooked up their lie, California utilities needed someone official to do a study that made it look like the lie was backed up by data.
To do that, they turned to an agency they have a long relationship with: the California Public Utilities Commission (CPUC).
In 2020, the CPUC began considering revisions to the state’s rooftop solar program, known as Net Energy Metering (NEM). To do their cost-benefit analysis, they hired the consulting firm Energy, Environment, and Economics (E3).
A quick scan of E3’s client list shows that their major clients are the utilities. And not just PG&E, SDG&E, and Edison. It also includes dozens of major North American private utilities.
Simply put, E3 had a conflict of interest. A really obvious one. But the CPUC hired E3 anyway.
E3’s report was filled with problematic accounting methods, but it achieved the utilities’ goal—an official government-sanctioned study that “proved” the utility lie.
The methodology behind E3’s rooftop solar study made its way into the CPUC’s cost / benefit analysis of rooftop solar, also called the “Avoided Cost Calculator.”
That’s when the lie machine went into overdrive.
Since then, groups like NRDC and TURN, academics like Severin Borenstein at UC Berkeley, and the CPUC and their affiliated agency the Public Advocates Office aggressively repeated the lie using E3’s conflicted work, or by replicating E3’s flawed methods.
We’ve written extensively about why these supposedly independent parties would choose to align their views with a utility misinformation campaign and rely on such biased methodologies.
What the data actually says: Rooftop solar consumers save all Californians money.
Energy economist Dr. Richard McCann recently unpacked the most recent version of the lie disseminated by the Public Advocates Office (PAO). PAO is an arm of the CPUC that often misrepresents itself as an independent consumer group.
PAO’s report claimed that rooftop solar customers shifted $8.5 billion of grid costs to people who don’t have solar. Their report even included a spreadsheet of calculations, making it seem reasoned and legitimate.
Dr. McCann found that PAO used incorrect numbers and omitted key data. When he corrected these mistakes, he found that rooftop solar actually saved all ratepayers $1.49 billion in 2024:
Dr. McCann’s work has been endorsed by twelve other well-regarded energy experts.
Dr. Mark Jacobson at Stanford University has also done his own work and found that the cost shift is a lie, and that rooftop solar is a net savings for all ratepayers.
How did California utilities burrow so deeply into the Newsom Administration?
See this article for a longer explanation, but in short, there’s three reasons:
Since 2000, California utilities have spent more than a billion dollars on lobbying and payments to politicians, nonprofit organizations, academics, and trade groups. Gov. Newsom in particular has received $2.5 million since 2000, more than any other sitting elected official, and far more than his last two predecessors.
The utilities have hordes of lobbyists, analysts, and public relations professionals talking to regulators, lawmakers, and nonprofit organizations every day, all year long. This has an impact on even the most well-intentioned government workers.
Gov. Newsom needs an excuse for the unprecedented rate increases his administration has sanctioned over the past six years. The utilities served up rooftop solar on a silver platter and they took it.
Never mind that the rate increases are a direct result of out-of-control utility spending and lax regulation. Owning up to that is a lot harder than blaming rooftop solar.
The bottom line: the utility lie about rooftop solar was created in a utility PR lab. It has no basis in data. Rooftop solar actually saves all ratepayers money.
